Total Debt Service (TDS) Ratio
The percentage of the borrower's income that is needed to cover housing costs (as included in the GDS) plus any other monthly obligations that an individual has, such as credit card payments and car payments. The most common formula is:
mortgage payment + property taxes + heating + 50% of condo fees (if applicable) + other debt payment obligations / gross household income.
TDS is capped by most lenders at 44% for the best borrowers.
About The Author
Don Scott
Don Scott is the founder of a challenger mortgage brokerage that is focused on improving access to mortgages. We can eliminate traditional biases and market restrictions through the use of technology to deliver a mortgage experience focused on the customer. Frankly, getting a mortgage doesn't have to be stressful.
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